The US has decided to "completely lift" its embargo on trade in lethal arms with the Southeast Asian country, Vietnamese President Tran Dai Quang has said, Reuters reports.

"Vietnam very much appreciates the US decision to completely lift the ban on lethal weapon sales to Vietnam, which is the clear proof that both countries have completely normalized relations," Quang said at a joint news conference with US President Barack Obama.

The announcement comes as tensions between Washington and Beijing are running high over a reclamation project in the South China Sea, where China has built artificial islands.

China has various territorial disputes in the area, which is rich in deposits of natural resources, with Brunei, Malaysia, the Philippines, Taiwan and Vietnam. To bolster its claim over the disputed territory, Beijing has been rapidly setting up defense installations in the area.

The US Navy is actively opposing the Chinese initiative, deploying additional warships to the disputed zone and conducting maneuvers near the Chinese artificial islands and flying over them, citing the “freedom of navigation” principle as an excuse.